NAB has 600 million reasons to feel superior but poorer

What's the price of being nice? If you're National Australia Bank, it's a cool $600 million a year.

That's the figure NAB's internal modelling has calculated as being the aggregate amount that Westpac Banking Corp, Australia and New Zealand Banking Group and Commonwealth Bank of Australia will make each year thanks to their decision to lift mortgage rates higher than the Reserve Bank of Australia.

Of course, the actual number will be different; there are a few more rate rises to go in the tightening cycle and no doubt the current price gaps will move around.

But all things being equal, if interest rates for the major banks were to stay where they are for the next 12 months, each of NAB's competitors will be making about $200 million more in profit each year.

Westpac led the charge by lifting its standard variable mortgage rate to 6.76 per cent, followed by ANZ on 6.66 and CBA on 6.61 per cent. NAB's decision to keep its rate rise to the RBA's 0.25 of a percentage point increase means its mortgage rate is 6.49 per cent.

As a price leader, it should be able to pick up some of the market share is has lost in the past two years - but it will need to pick up a lot of new customers to make up the difference in forgone revenues.